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ELLIOTT WAVE ANALYSIS - Latest Market Commentary

Stock Indices

The S&P’s intra-hourly five wave impulse decline that unfolded from the July high of 1991.39 into the early August low at 1904.78 is currently being tested by a deep secondary retracement. Should a reversal signature occur below this high, then an immediate accelerative decline would resume to confirm a multi-month counter-trend is set to resume as intermediate wave (4) with interim downside targets towards 1789.74 and ultimately a test towards 1675.35, the fib. 38.2% retracement of wave (3) sometime before year-end. Failure to stage a reversal signature followed by a break above the 1991.39 high would otherwise prolong intermediate wave (3)’s advance. ###This is possible if the recent five wave decline between 1991.39-1904.78 becomes the third sequence in a corrective expanding flat pattern and labelled a 4th wave subdivision within the finalising impulse advance from the April low. Alternative upside targets converge towards 2014.12-17.59. This represents only a +1.7% gain above current levels, not enough to change the bearish outlook for European indices. The Eurostoxx 50 is currently engaged in a counter-trend upswing from the August low of 2977.52 with limits towards 3127.45+/- before the downtrend resumes. The Xetra Dax is also engaged in a counter-trend upswing but with upside limits towards 9350.27-86.51+/-. In Asia, indices have remained buoyant but are clearly heading towards an important high. The overlapping characteristic of the Hang Seng index from the Oct.’11 low depicts a leading expanding-diagonal pattern approaching completion with upside limits towards 26100.00+/-. In Japan, the Nikkei has recently completed a textbook counter-trend upswing at 15810 (futures) that began from the early Feb.’14 low whilst taking the form of an expanding flat. The August decline has since confirmed the larger downtrend has resumed – a counter-trend upswing is again synchronising with the S&P but the Nikkei is due to collapse in an accelerative 3rd wave within the next week. 21st August 2014

Financial Updates Currencies

Currencies (FX)

For almost two weeks, the US$ index and Euro/US$ had been engaged in 4th wave contracting triangle sequences. On Monday, both broke out of these patterns and thus confirmed an attempt into new short-term price extremes. For the US$ index, resistance was measured to 8203-09 – for the Euro/US$, equivalent support projected to 1.3289-86. Both target ranges have been achieved, and thus both contracts are in a position to stage a reversal and subsequent counter-trend swings – ###idealised downside for the US$ index ranges between 8137 and 8064, equivalent upside for the Euro towards 1.3412-1.3540. It is important to keep in mind, however, that larger trend direction remains unchanged – the US$ is poised for more upside in the months ahead, with idealised targets to 8885+/-, whilst the Euro is shown engaged in the finalising segment of a three price-swing expanding flat pattern – ultimate downside measures towards 1.2528. US$/Yen finally broke out of its gruelling trading range between 10308 and 10150 by trading higher. This brings our attention to the larger horizontal flat scenario that advocates upside continuation in the weeks ahead, with ultimate objectives remaining unchanged towards 10412+/- to finalise the 3-3-5 sequence that began from the 2014 low of 10075. As the current rally labelled wave ‘C’ within the flat is unfolding into an ending contracting-diagonal, a more volatile up-and-down route is expected towards the 10412+/- area. AUD/US$ staged a clean rally from the 0.9239 August low and has already traded into original upside targets at min. 0.9340 with a recorded high of 0.9346. The sequence from 0.9239 however suggests a five wave impulse pattern which in turn implies additional upside during the next few weeks. Thus, ultimate upside for the correction from 0.9239 has been raised to 0.9403-13, the fib. 61.8% retracement of the preceding three price-swing decline from this year’s 0.9506 high. Once achieved, a reversal is expected to confirm the resumption of the larger downswing – ultimate targets remain towards 0.8973. 21st August 2014

Financial Updates Bonds

Bonds (Interest Rates)

Benchmark US10yr yields traded into a formative low last week at 2.300% ending a multi-month counter-trend expanding flat pattern that began from the Sep.’13 highs. A reversal signature has been triggered with yields now above 2.410 but with a much higher yield outlook for the next several months into year-end. The latest Federal Reserve minutes from its July policy meeting is not expected to add any significant news ###to the current ‘tepid-taper’ programme. More attention is focused on Friday’s annual Kansas City Federal Reserve meeting held in Jackson Hole. Both Janet Yellen and ECB president Mario Draghi are scheduled to speak providing another opportunity to glean more information on monetary policy. Meanwhile in Europe, Germany’s DE10yr yield has formed an interim low at 0.954% providing some stability having declined sharply during the last several weeks. This low has ended a 3rd wave decline within the impulse pattern that began last September with 4th wave upside targets during the next few weeks towards 1.194%. This corresponds with Bund futures giving up some of its recent gains with downside targets towards 147.65. The US10yr-DE10yr spread has again widened to 143bps, the widest it has traded for several years. There is a positive correlation with this spread and U.S. stock markets – both formed a low in June ’12 with corresponding five wave impulse patterns unfolding since. The next major resistance for the spread is at 150bps. 21st August 2014

Commodities

Following last week’s short-term volatility spike that initially pulled gold lower from above 1320.00 down to 1292.50 and subsequently up to 1310.25, prices have returned to retest this low range. There now exists several short-term permutations for gold’s path to unfold during the next week that includes another upswing to either 1317.00+/-, max. 1329.60 although we maintain a more ###bearish bias with downside targets to 1260.43+/-. This level is derived measuring the July decline from 1344.93 as a counter-trend zig zag – should support hold followed by a reversal upswing, the outlook for the next couple of months would turn bullish – alternatively, an accelerative break below would confirm our medium-term downside targets towards 1096.00+/- will be reached during the same time period. Silver’s recent decline from the July high of 21.60 is equally ambiguous at this juncture although we expect a key test of support between 19.38 and 19.24 to ultimately determine direction for the next couple of months – either a continued decline to medium-term downside targets at 17.43 or a sudden upswing that begins a 2-month rally to 25.12. Downside targets for Crude oil towards 94.41-94.00 were achieved this week ending a counter-trend expanding flat pattern as minor wave ii. that began from the March high of 105.22. Our updates have taken the entirety of a US$13 decline that unfolded during the last few months but it is clear that upward price rejection is now required to confirm a bullish 3rd wave in progress. Any continued decline below the early Jan.’14 low of 91.24 would otherwise confirm a more prolonged multi-year horizontal flat pattern is underway requiring a continuation lower during the next few months with a revisit of the June ’12 low towards 77.28. 21st August 2014

LATEST ARTICLES

THE ‘INFLATION-POP’ - PRECIOUS METALS SET TO SURGE INTO RECORD HIGHS

Bloomberg hosted a Precious Metals Forum on 23rd May and WaveTrack International was invited to present our latest Elliott Wave price-forecasts. The event was sponsored by the CME Group and Johnson Matthey.

OUTLOOK & FORECASTS FOR 2013

Highlights:

  • The 2013 outlook for global stock indices and commodities remains very bullish and is entering the last stage of the ‘inflation-pop’ phase that originally began from the post-financial crisis lows of 2008/09
  • This is expected to ignite another period of asset buying that increases risk-on multiples by a minimum 45% per cent and in some cases as much as +300% per cent, sending some global stock indices and commodities into record highs
  • Shorter-term, there is a danger of a downward adjustment of -5-8% per cent, but then sharp price advances to resume
  • Commodity related stock indices and equities are expected to outperform as a sector during the next 12-16 months
  • Banking stocks to participate, but most will not exceed their pre-financial crisis highs

As always, this year’s Outlook & Forecasts for the next twelve months are created applying the Elliott Wave Principle for the assessment of pattern and price amplitude, also Cycle Analysis for the timing of the larger trend reversals. Not always do they jive, but they seldom contradict and more often, provide valuable insights into one or two variations of a similar theme within a seemingly unlimited amount of possibilities.

Even though this report outlines the price expectancy of all asset classes for 2012 it will also illustrate how this coming year fits together into the larger picture. The reasoning behind this is to move away from the 'black-box' stereotype and show you why the results relate to their specific outcome. Overall, this report deals with two different time-periods – long-term and inter-mediate term. Long-term refers to the uptrends from the Great Depression of 1932 onwards and inter-mediate term for the coming year and into 2013.

HOW TO INTERPRET EACH ELLIOTT WAVE CHART

What do you see when looking at an Elliott Wave chart? Just lots of numbers & letters overlaying the price data? – or do you see definable patterns that are immediately familiar? And how do you interpret the results of the analysis and put it into an effective trading plan? Read on and test your own knowledge of these subjects and much more...

A COMMODITY SUPER-CYCLE?

Recent reports of a Commodity Super-Cycle grabbed my attention for two reasons – first, this is diametrically different to the outlook I foresee developing during the next decade, and second, this terminology has surfaced at a time when various commodities have already undergone large percentage gains measured from the Feb.'09 lows

THE 'DEFLATIONARY SCENARIO'

The primary theme of this presentation focuses on a 'Deflationary' outlook, forecast as the dominant aspect continuing during the next decade. This is derived from analysing the Elliott Wave pattern structure of the CRB (Cash) Index during its expansionary period of the last 76 years.

THE 'FLASH CRASH'

The Update Alert! messaging service of EW-Forecast Plus responded to the sharp collapse and the following recovery of US stock indices during the volatile trading session on the 6th May.

OUTLOOK FORECASTS FOR 2011

This analysis centres around the S&P 500 that is used as a proxy for other global indices. The great bull market beginning from the 1932 low ends 68 years later in 2000 - other global indices peaked later in 2007 (75yrs) – some still continuing to progress.

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"I just wanted to congratulate you on the EW-Compass reports launch. I'd say all the work you've all put into this project is well worth it… never cease to be amazed by the harmony that you find between the fib relations you highlight and the Elliott count you propose. You are a true descendant of RNE, and I'm quite sure he'd have really loved to see your work… Another aspect that sets you apart is your deep knowledge of the how and why of pattern relationships between higher & lower degrees of the same price action. So much to learn there". - T.S.

ELLIOTT WAVE PATTERN

INTRODUCTION TO THE WAVE PRINCIPLE

The Wave Principle, often referred to as Elliott Wave is a unique methodology that applies Natures Laws, those encompassing the Natural Sciences and Universal Geometric Philosophies to the financial markets. It allows us to view price fluctuations as an organised process that can be non-linearly extrapolated to gain a glimpse into the future direction of trends, counter-trends and amplitudes on any market or contract traded around the world.

Expanding Diagonal Patterns - Do they actually exist? - Elliott's inclusion of the Contracting Diagonal

In R.N.Elliott's original treatise of "The Wave Principle (1938)", he introduces us to diagonal patterns for the first time on page 21. Under the heading, Triangles, Elliott describes the difference between horizontal triangles that represent hesitation within an ongoing, progressive trend and diagonal triangles that form the concluding 5th wave of a larger five wave sequence.

NEWS & EVENTS

Tradersworld Online Expo #12 – Starts 12th November 2012

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 12th Trader Expo held online for 7 weeks starting on 12th November 2012 and ending in the new year on 6th January 2013. Peter’s presentation is entitled “Elliott Wave Price Forecasts & Cycle Projections – Three Phases of the 18 Year Bear Market ~ ‘Shock–Pop–Drop’” for more information visit http://tradersworldonlineexpo.com/

Announcement: 123rd Battery Council & Trade Fair Convention in Miami, 1-4 May 2011

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 123rd Trade Fair Convention of the Battery Council in Miami, 1-4 May 2011. Peter’s presentation is entitled "The Historical Price Trend of Lead and Applying the Elliott Wave Principle to plot its course into the Future".

ELLIOTT WAVE PRICE-FORECAST UPDATES